Tax

A Brief History of Tax Credits

A Brief History of Tax Credits

November 30
00:00 -0001

A Brief History of Tax Credits

The United States Federal tax credit system is maintained to provide leniency to taxpayers who are determined to merit such treatment by the government. Within the U.S., Federal tax credits are considered a means for the government to acknowledge that taxpayers have satisfied some though not every aspect of their financial obligation to the government. 
Under the same name, Federal tax credits are also observed in Canada and Australia, and under the term “Avoir fiscal” in France. The concept operates somewhat differently in other taxation systems, such as that of the United Kingdom, where a tax credit is created by considering a deduction to have been made when such is not the case in reality. In United States practice, the legislative and executive branches have used the Federal tax credit option as a stimulus for economic activity and an incentive for political support.
In 1981 Congress passed the Economic Recovery Tax Act, which was intended to remedy the overall financial decline and assorted resultant hardships experienced in the late 1970s, when the industrial sector of the United States experienced a decisive blow. 
To this end, the legislation shifted away overall tax policy from the overall model of the post-World War II era to an emphasis on reducing costs to business and thereby increasing economic activity across the board. These reforms were made in the spirit of the more conservative tenor of the Reagan Administration. As a part of these overall reforms, the legislation included a Federal tax credit of ten percent for investments.
A later significant achievement in the Federal tax credit area can be found in the form the Taxpayer Relief Act of 1997. In addition to the specific benefits of the Federal tax credits provided through this legislation, the overall significance of this legislation can be found in the way it introduced the concept as a viable and much-used aspect of the American tax policy of the late 20th and early 21st century. 
Under this state of affairs, Federal tax credits have been offered in an increasing number of forms, many of which can be refunded by the taxpayer if certain conditions are found to be present. At the time of the Taxpayer Relief Act’s passage, however, the most publicized and noted aspect of the legislation was its provision for a Per Child Federal Tax Credit, which allowed families falling beneath a certain income bracket to receive a credit greater than their previous financial liability for paying taxes. Initially placed at a level of $500 per child, this amount was later doubled in a Bush-era tax package passed in 2001.
Another significant and related portion of American Federal tax credit policy can be found in the provision made for a “Dependent Child.” This measure was also supplemented in 2001 by the Bush tax cuts, and later in 2004 by the Working Families Relief Act, the latter of which newly established the qualifications for children whose care could be covered by Federal tax credits. 
Share

About Author

admin

admin

Related Articles

Tax News

Woman Sentenced to Five Years Following Tax Fraud Scheme The plan seemed perfect to the three young Sacramento women: use internet tax software like TurboTax, steal Social Security numbers, and start filing fraudulent tax returns in the hopes of getting large refunds.
Proposed Pregnancy Tax Break Creates Controversy Proposed Pregnancy Tax Break Creates Controversy Michigan lawmakers have proposed a controversial new law that would give tax breaks to some pregnant women.
Statistics of Income Bulletin Released Statistics of Income Bulletin Released The Internal Revenue Service (IRS) released the 2012 issue of the Statistics of Income Bulletin last Wednesday.
More Tax Relief for Victims of Hurricane Sandy More Tax Relief for Victims of Hurricane Sandy The Internal Revenue Service (IRS) has announced more tax relief for businesses and individuals affected by Hurricane Sandy in Connecticut, New Jersey, and New York.
2013 Inflation Adjustments and Pension Plan Limitations 2013 Inflation Adjustments and Pension Plan Limitations On October 18, 2012, the Internal Revenue Service announced the increase of certain tax benefits because of inflation adjustments and 2013 pension plan limitations.
Farmers Affected by Drought Have Time to Replace Livestock Farmers Affected by Drought Have Time to Replace Livestock According to the Internal Revenue Service, farmers and ranchers affected by the huge drought in the United States have an extension to replace livestock and defer tax on gains made through forced sales.
Executive Director Pleads Guilty to Illegal Campaign Contributions Executive Director Pleads Guilty to Illegal Campaign Contributions On October 1, 2012, the US Attorney’s Office for the District of New Jersey announced that Thomas J.
Filing and Payment Extensions End October 15th Filing and Payment Extensions End October 15th On September 28, 2012, the Internal Revenue Service announced that taxpayers who received tax-filing extensions will have to file the forms by October 15.
Much Awaited Statistics of Income Bulletin Much Awaited Statistics of Income Bulletin On September 24, 2012, the Internal Revenue Service released the Summer 2012 issue of the Statistics of Income Bulletin.
Victims of Straight-Line Winds in WV Eligible for Tax Relief Victims of Straight-Line Winds in WV Eligible for Tax Relief On September 20, 2012, the Internal Revenue Service declared that victims of severe storms in parts of West Virginia that occurred on or around June 29, 2012, may receive tax relief.
Update Tax Relief for Hurricane Isaac Update Tax Relief for Hurricane Isaac The Internal Revenue Service has announced tax relief for victims of Hurricane Isaac on September 5, 2012, and the IRS has updated the areas for tax relief on September 17, 2012.
Obama Calls for Tax Credits for Unemployed Veterans Obama Calls for Tax Credits for Unemployed Veterans Calling on all members of Congress to put the country ahead of politics, President Obama called for action to help unemployed and injured Veterans land jobs during the difficult economy.
Payroll Tax Cut May Not Be Extended Payroll Tax Cut May Not Be Extended Republicans, who have already blocked much of President Obama's $447 billion jobs creation bill, may now be moving towards not extending the payroll tax cut as it expires at the end of the year.
France to Increase Tax, Cut Budget During Financial Difficulty France to Increase Tax, Cut Budget During Financial Difficulty With the European financial crisis creating havoc among Euro Zone member's economy, France has been forced to re-tool their budget in light of an unbalanced budget.

Guide To: Tax Lawyers

Guide to Finding Tax Lawyer Guide to Finding Tax Lawyer How do I find a Tax Lawyer?Tax lawyers specialize in helping clients who need guidance in navigating the complex tax codes of the United States and local state taxes.